Frontier IP Group's (LON:FIPP) five-year total shareholder returns outpace the underlying earnings growth

By
Simply Wall St
Published
February 23, 2022
AIM:FIPP
Source: Shutterstock

It hasn't been the best quarter for Frontier IP Group Plc (LON:FIPP) shareholders, since the share price has fallen 16% in that time. But that doesn't change the fact that the returns over the last five years have been pleasing. Its return of 74% has certainly bested the market return!

Although Frontier IP Group has shed UK£5.8m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Frontier IP Group

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Frontier IP Group managed to grow its earnings per share at 34% a year. The EPS growth is more impressive than the yearly share price gain of 12% over the same period. So it seems the market isn't so enthusiastic about the stock these days. The reasonably low P/E ratio of 4.92 also suggests market apprehension.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
AIM:FIPP Earnings Per Share Growth February 23rd 2022

This free interactive report on Frontier IP Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Frontier IP Group has rewarded shareholders with a total shareholder return of 35% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 12% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Frontier IP Group better, we need to consider many other factors. Even so, be aware that Frontier IP Group is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.

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